21 April 2020
In general, what we are now seeing in terms of COVID-19 impact, is that we have a medical environment that is established, a little less volatile, and hopefully stabilising and decreasing in risk. The economic/supply chain environment has certainly been impacted, and despite the considerable stimulus incentives provided by our Government, there remains many companies that are experiencing financial pain, cash flow issues and market hardship.
The build-up of this on a national level is still growing, not subsiding, and the supply chain and logistics industry is seeing impacts on several fronts:
Port Operations
Contingency planning by the Government and Port Authorities is underway for potential storage/staging sites, mainly due to concerns regarding the ability of importers to fund their statutory payments for duties and import GST amid cash-flow issues. Some of the potential key issues that could present in the coming weeks are:
- port congestion awaiting cargo clearances,
- limited storage capacity,
- expensive and escalating storage costs adding to cash-flow pressures,
- slower container turnaround times creating a potential for container shortages for export requirements.
Customs Broker / Importer Commercial Agreements
Customs Brokers are becoming increasingly wary of the cash-flow risk involved in making up-front payments for duty and GST on behalf of importers who may not be able to meet their payment terms due to cash-flow issues. It’s a double whammy, with the potential for both brokers and importers to suffer financial pressures.
Payment Deferral Proposals - Industry Lobbying
There has been significant lobbying to the Government seeking deferral assistance on payment of duties and GST during the impacted COVID-19 period.
It is our view that this is a massive task for the Government to consider from financial, compliance and general risk perspectives. Not least of the Governments concerns is the impact delaying duty and GST payments would have on their own cash-flow. Customs duties are not the biggest issues from the financial perspective; currently there is no model to defer duties, but the duty payment process forms part of the cargo release compliance process so there are overlapping issues. The larger issue from a financial perspective is the Import GST. At 10% of the CIF value of the goods, it can be a significant amount.
We await Government responses on this matter, but note that it would be a significant challenge for the Australian Border Force and Australian Tax Office to facilitate a quick outcome in this process, if they are prepared to do so at all.
17 April 2020
With acknowledgement to our peak industry body FTA (Freight & Trade Alliance), we share the following update regarding the impact of COVID-19 on supply chain operations:
China
- Hubei province has resumed business activities. Wuhan International Container Co. Ltd (management of Wuhan Ports) has confirmed Wuhan Port is back to normal operational levels.
- ÓNE, Maersk/MSC will suspend CAE service (China-Australia Service) until at least Q2 this year with the last sailing departing from Xiamen on 22 April.
- According to China Customs Notice No.53 April 10. Effective April 10, 11 medical related items will be inspected to ensure the quality of the exported goods. These shipments can expect delays for shipment.
New Zealand
- The 4 week lockdown in New Zealand is due for review in the next week. At present there seems to be a divide in NZ between Health officials and academics as to when the lockdown level should be lowered and to what.
8 April 2020
China
- Imported or related COVID-19 cases are almost 1000, local non symptom cases are 1033 as at April 7. The Chinese government is trying to control the second wave at this stage.
- Wuhan and Hubei province will be released from lockdown effective April 8.
- Chinese People Daily, April 7, confirmed that key ports, such as Shanghai, Qingdao, Tianjin(Xingang), Ningbo(Zhoushan) and Shenzhen, are back to 95% to 100% productivity compared to same period last year.
New Zealand
- New Zealand continues on its “level 4” lockdown however whilst essential goods are being moved to end consignees, non-essential cargo is currently being stored at transport company yards or alternate sites pending the “lockdown” period ceasing.
- Another issue is that some businesses are finding delays of 3-4 days when trying to obtain a slot to collect cargo at Auckland terminal. Thankfully a number of shipping lines have agreed to requests for relief of demurrage / detention.
Europe
- Ports are operational in most countries but processing is slow. Italy is most impacted as reduced working hours are compounding the issue. Italy and Spain also have bans on non-essential operations so these, eg; factories, warehouses etc, are closed.
General Update
- In response to the COVID-19 outbreak, a number of countries, ports and organisations are publishing details of the measures being put in place. Please review link as required.
2 April 2020
China
- China has started to release the restrictions in Hubei province step by step as mentioned last week, the city should be back to normal from April 8. Currently, China have over 771 imported cases, and local new cases in the last week is less than 20.
- Normal trains services have started back in Hubei province, so the human resources from Hubei province are going back to other provinces to fill the demands (Xinhua news March 30). However, the Health checks and control policy are still being implemented.
Australia
- Over 60 Port of Melbourne dock workers have been stood down due to their refusal to unload cargo from a ship from China. The ship, fully laden with much needed supplies including toilet paper, surgical masks and tinned food left China on March 17, but stopped at a Taiwanese post less than 14 days ago. The vessel had been cleared to berth at DP World by the Australian Border Force and the Department of Agriculture, Water and the Environment’s Biosecurity. We will be monitoring the situation for any further developments.
New Zealand
- New Zealand has announced a move to “level 4” lockdown for a period of 4 weeks commencing Wednesday March 25. Essential goods have no restrictions – non essential goods are being moved dependent on consignee availability/compliance – some shipping lines/stevedores accepting requests for relief of demurrage/detention.
General Update
- In response to the COVID-19 outbreak, a number of countries, ports and organisations are publishing details of the measures being put in place. Please review link as required.
We will continue to provide updates as we receive them, however, if you have any questions or concerns, please get in touch with your local FJT office.
